Renewed consumer demand for air travel and construction activity will support growth
Los Angeles, CA (PRWEB) September 29, 2012
A range of factors influences the Heavy Construction Equipment Rental industry, from air travel to government funding of roads and bridges. The general trends and activities of downstream industries, such as air, sea and rail transportation; highway, street, tunnel and bridge construction; and oil exploration and drilling all affect the industry's performance. Economic conditions, such as interest rates, unemployment and disposable income, also affect demand. Over the last five years, the economic recession and its impact on the US construction markets particularly hurt demand for heavy construction equipment. IBISWorld estimates revenue will have decreased at an average annual rate of 2.5% to $24.9 billion over the five years to 2012, according to IBISWorld industry analyst Andrea Alegria.
Conditions were grim for rental and leasing businesses from 2008 to 2010. The Heavy Construction Equipment Rental industry was particularly hard hit in 2009, the peak year of the economic recession. Revenue fell 16.6% that year. However, the industry has experienced positive revenue growth starting in 2011, as firms benefited from a cautious business environment in which developers and business owners opted for renting instead of buying equipment as a way to free up capital for other needs. As access to capital remained challenging, builders and developers often turned to rental firms as their only option, especially after financing was denied. Revenue is expected to further grow 6.1% over 2012, Alegria says.
Over the next five years, a return to stronger demand from downstream transportation and construction industries will boost industry performance. Profitability will also improve. After being hit by a significant drop-off in demand and an increase in price competitiveness, average profit margins are forecast to account for about 12.2% of revenue in 2012, down from 13.4% in 2007. As demand for rental equipment stabilizes, profit margins are expected to increase by 2017. Growth in establishment and employment numbers is expected to trail behind revenue as operators consolidate and focus on internal cost savings. The industry has a low level of market share concentration. A vast number of smaller players that operate in geographically dispersed or specialist markets generate the remainder of revenue. Most firms operate one or two rental locations, while larger companies operate on a national level with hundreds of locations across the country. For more information, visit IBISWorld’s Heavy Construction Equipment Rental in the US industry report page.
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IBISWorld industry Report Key Topics
Industry companies are involved in renting or leasing heavy construction, off-highway transportation, mining and forestry machinery and equipment without operators. Companies in this industry may rent or lease products including aircraft, railcars, steamships, tugboats, bulldozers, earthmoving equipment, cranes or well-drilling machinery and equipment.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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